Spotlight: survey lays bare the fears of licensees

By James Wallin, MCA

- Last updated on GMT

Solutions offered: survey lays bare the fears of licensees
Solutions offered: survey lays bare the fears of licensees

Related tags: Young adults, Beer

An annual survey of readers of The Morning Advertiser shows a sector struggling to keep up with the demands of a changing consumer base. Here we detail their concerns and look at what solutions are offered in MCA’s UK Pub Market Report.

A survey of readers of The Morning Advertiser​ (MA​) has laid bare the fears of licensees that pubs are falling short when it comes to attracting Millennials and Generation Z-ers.

The annual licensee survey for the UK Pub Market Report 2017​, produced by MA​’s sister title, MCA​, shows that 18 to 24-year-olds account for only 3% of food-led and 1% of wet-led pubs as a key customer group.

The results show that customers in food-led pubs skew towards the middle-aged (40-60s), couples, business people, families and retirees, while 25-40s and single men are over-represented at wet-led pubs.

No wonder seven in 10 licensees feel they need to work harder to attract more young adults, with free Wi-Fi, a more modern drinks range and the availability of mobile phone charging points seen as the most successful ways to attract this market. Respondents also emphasise the importance of giving younger people a purpose to go out, including products (such as cocktails) that they can post on Instagram and focusing on the ‘theatre’ of hospitality.

The survey shows fewer licensees in 2017 describing their turnover as up on the year before – 53% compared to 59% in 2016. Similarly more licensees report profit declining – 41% compared to 33% last year.

Business rates and wages are cited as the biggest cost increases over the past year. Both are cited by 34% of respondents, but while the incidence of people citing business rates is up 19 percentage points (pp) on last year, wages are down 22pp. The other significant cost pressures are drinks prices (chosen by 14%), utilities (9%), rents (5%) and food costs (4%).

Despite the tough trading conditions, the report shows licensees remain resilient on turnover predictions, with 54% expecting sales to rise over the next year, not far off the 59% of 2016. When it comes to predictions of trade growing ‘substantially’, the picture is even more positive, with 8% expecting good growth compared to 5% last year. The proportion expecting turnover to fall, however, increases from 9% last year to 14% now.

This year, 27% of respondents score their relationship with their landlord as five out of five (very good), compared to 37% last year. The weighted average for this year is 3.3 compared to 3.8 last year and 3.4 in 2015.

Beer remains the most important business area for those who took part in the survey but other areas are clearly in growth, with spirits, events and soft drinks all growing in importance.

Some 47% of respondents intend to increase their offer of premium spirits over the next 12 months, up from 41% in 2016. The numbers who also intend to adopt a policy of differentiation with a speciality and niche range and/or adding a range of packaged beers from around the world are also growing.

The survey results conclude with a look at publicans’ greatest fears for the future, topped by increases to business running costs, followed by greater red tape and higher beer prices – all up on the previous year.

Diminishing appeal of pubs

The report also features a bespoke survey in which young adults reveal their attitudes towards pubs.

It confirms the view of licensees, that pubs are falling down the pecking order for Millennials. The research shows that drinking out is now rated only the 16th most popular leisure activity for those aged 18 to 34. However, the good news is that when asked what activity they most like to do with their friends, drinking out significantly outperforms drinking in (41% to 28% respectively) and is the second most popular choice after eating out (48%).

Despite this preference for eating out over drinking out, the No.1 factor that would encourage more pub visits comes out as inexpensive drinks, chosen by 25% of respondents. Appealing atmosphere/environment is the second most popular choice, picked by 20%. Results show this trend mirrored when it comes to customers in the Generation Z bracket (born between 1995 and 2010 but here focused on 18 to 21) with 26% choosing inexpensive drinks and 23% atmosphere. Breaking up the responses by age bracket also shows the importance of free Wi-Fi to Generation Z, with 23% choosing it as most important as opposed to just 8% of 30 to 34-year-olds.

When it comes to their attitudes towards food, it is clear that quality wins out over quantity, with 40% agreeing that better food quality rather than lower food prices would encourage them to visit pubs more often.

On the subject of the pub’s role in society going forward, 35% of respondents to the survey say they believe they will be visiting pubs more frequently in five years’ time, compared to 16% who expect it to be less often. The 18 to 21-year-olds are over-represented for both more and less frequent visits.

In their own words

Licensees describe how they are seeking to attract younger customers

“By demonstrating that the pub environment is a far better way to meet and chat than any impersonal social media platform.”
Leaseholder, wet-led

“Introduce drinks relevant to them – eg, craft beers, ciders, lagers and contemporary cocktails using premium products. Introduce food relevant to them – eg, fast-casual food including sliders and tacos.”

Freeholder, wet-led

“Offer more value and quality – seen as a longer-term strategy appealing to a wider range of young adults and discouraging binge drinkers who tend to ‘pre-load’ rather than spend in pubs.”

Leaseholder, 50:50 wet:dry split

“Today’s consumers live in nice surroundings with plenty of entertainment at home – pubs need to offer something different, better or more interesting.”

Leaseholder, wet-led

Related topics: Marketing

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